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RESEARCH ARTICLE
HUMAN RESOURCE MANAGEMENT AND ORGANIZATIONAL PERFORMANCE
Human resource management has been studied for over 30 years and received much attention for its positive impact
on organizational performance. Several studies indicated a linkage between human resource management and
organizational performance (Katou, 2012; Katou&Budhwar, 2010; Phanwattana& U-on, 2017). In today competitive
environment, each organization needs to improve their performance through seeking and hiring skillful and
competent employees as these employees can drive the organization to achieve its goals. As such, effective human
resource management is considered as one of the best strategies to increase organizational performance and
sustainability (Chang & Huang, 2005; Kazlauskaite et al.2012).
The science of human resource management is the concept evolved from personal management. This is because
personal management has a limited scope focusing on work attendance, absenteeism, retirement and welfare of
employee which does not cover the long-term planning of manpower in the organization. Therefore, the term
“human resource management” has been used to cover the broader sense of managing human resources in the
organization, which includes human resource planning, recruitment and selection of qualified employees, providing
benefits and compensation to employees appropriate with their workload and effort, training and developing
employees to have more knowledge and skill required by the organization, retaining qualified employees to work in
the organization over the long run, conducting work performance appraisal and promoting qualified employees to a
higher position to increase their motivation and inspire them to work for organizational performance. Channuwong
(2014) and Mondy and Mondy (2014) mentioned that human resource management is very much important to the
organizational success, which can be summarized as: (1) Human resource management can drive the organization to
achieve sustainable growth because the process of human resource management can help the organization to have
knowledgeable, competent and qualified employees to serve the need of working in the organization, which can
move forward the organization to achieve organizational goal. (2) Human resource management helps to improve
morale and motivation of employees. When the organization pay fair benefits and compensation to employees based
on their workload and devotion of time and effort, they will be committed to their organization and have
organizational loyalty and commitment. (3) Human resource management can inspire employees to work with
strong effort and energy, and with their full competency based on their various knowledge and skill. (4) Human
resource management can create social sustainability to the country. This is because human resource management
helps to increase work employment and develop life quality of employees. Moreover, it helps to make the country
stable and prosperous in terms of economy and wellbeing of the people.
The factors that enable the organization to manage human resources effectively consist of (1) Commitment.
Employees are committed to the organization and work with full effort and devotion for the success of the
organization. (2) Competency. Employees work with high competency, knowledge and skill relevant to their
assigned jobs, duties, responsibilities, and positions. (3) Cost effectiveness. The organization focuses on investment
cost in human resources which can create added-value to the organization itself (Channuwong, 2008; Kumar &
Thomas, 2003; Soisud&Inbua, 2021).
Human resource management can be classified into two senses. In narrow sense, it refers to the functions and
operations of a single department in a firm that is the human resource or personnel department. In a broader sense,
though, human resource management involves the entire organization, even when a special staff department exists.
After all, general management is also involved in training and developing workers, evaluating their performance,
and motivating them to perform as efficiently as possible. Herman (2001) and Katangchol et al. (2023) found that
the core responsibilities of human resource management consist of human resource planning, recruitment and
selection, training and development, performance appraisal, and benefits and compensation. Trained specialists from
the human resource department are typically involved in carrying out each of these responsibilities. However, the
responsibilities are usually shared with line managers, ranging from the company president who is involved in
overall planning to the first-line supervisors who may be involved in preliminary interview with applicants and in
employee training.
Therefore, human resource management is the most important activity, which can help the organization to gain
qualified employees to work for the organization. Human resource management has been used as organizational
strategy in managing human knowledge, skill and talent to work for increasing organizational performance. This
includes training and developing unqualified employees with necessary skill to work for organizational success.
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In modern business companies, human resource managers assume primary responsibility for forecasting personnel
needs, recruiting, and aiding in selecting new employees. They also assist in training and evaluation, and administer
compensation, employee benefits, and safety programs which are the important components for running business
(Kumar & Thomas, 2003). Robert and David (2001) defined human resource management as the use of human
resources as the most valuable asset to work for achieving organizational success with the main seven
responsibilities as follows: (1) manpower planning, (2) recruiting and selecting qualified employees, (3) training and
developing knowledge and skill of employees, (4) paying compensation and benefits, (5) providing health and safety
to employees, (6) labor relation, and (7) research in human resources. Donald (1996) stated that human resource
management is an activity in attracting, selecting, training, giving compensation, and retaining talent, skillful and
experienced employees to work for increasing organizational performance so that the organization can move
forward to be the excellent.
Human resource planning involves three steps. First, present human resources must be assessed. At this stage,
human resource managers have to determine whether the present work force is appropriate for the firm’s current
needs or whether it is being used properly. Second, the human resource forecast of the future personnel needs must
be conducted. This forecast compares the current employee skills and their projected skills at some future date with
the expected organizational needs at that date. Finally, a program must be developed for meeting future human
resource needs. The forecast serves as a blueprint for training current employees and recruiting new employees to
meet organizational needs as they occur (Mathis & Jackson, 2008; Michael et al., 1999; Wren, 2000). All of these
steps were identified in Figure 1.
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Periodically
The human resource manager plays an important role in selecting employees who best meet with the specific jobs.
Because recruiting is a difficult chore that involves finding, hiring, and training people who are an appropriate
technical and social fit, human resource managers turn to many sources for assistance. These include internal
promotions, advertisements, public and private employment agencies, college placement bureaus, management
consultants, professional organizations, referrals, and applicants who simply show up at the office. An interesting
trend in human resource management has been the increase in the number of temporary workers (Milkovich, 2002).
After the job description and job specification are prepared, the next step in the selection process is recruiting
qualified employees. Human resource department uses both internal and external sources to find candidates for
specific jobs. Current organization has a policy of hiring from within – that is, considering its own employees first
for job openings. Since the human resource department maintains a file describing the special skills and other
qualifications of all employees, its records can be quickly screened to determine whether any employees are
qualified for a job opening. Using current employees to fill job vacancies is a relatively inexpensive method of
recruitment that also contributes to employee morale. However, the organization must utilize external sources to
some extent in filling vacancies or in adding new employees for newly created jobs (Mondy&Mondy, 2014;
Thornton, 2001)
Selection is a process of choosing individuals with qualifications needed to fill jobs in an organization (Mathis &
Jackson, 2008). Selection is the process of gathering information to decide who should be hired, under legal
guidelines, for the best interests of the individual and the organization (Solomon, 2000; Thomas & Taylor, 2000).
According to Louis and David (1993), once job applicants are located, the next step is screening them to determine
who is best suited for the job. First, candidates complete an application form that is used to determine whether they
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meet the general qualifications for the position. The form requests information such as name, address, type of work
desired, education, experience, and personal references.
The selection process is an important element in human resource management, which consists of the following six
steps: (1) Completion of an application form. Once this was a simple procedure with few complications. Today,
legal guidelines limit the kind of questions one can ask. Nonetheless, such forms help discover educational
background, past work experience, career objectives, and other information directly related to the requirements of
the job. (2) Initial and follow-up interviews. Applicants are often screened in a first interview by a member of the
human resource department staff. If the interviewer considers the applicant a potential employee, the manager will
supervise the new employee interviews. Such interviews are helpful in testing an applicant’s ability to communicate
clearly, to adapt to a stressful situation, and to clarify his or her goals, career objective, and background. It’s
important that managers prepare adequately for the interview process to avoid selection errors that may have. (3)
Employment tests. Employment tests have been severely criticized because of charges of discrimination.
Nonetheless, some business companies continue to use them to measure basic competencies, to test specific job
skills, and to help evaluate applicants’ personalities and interests. In using employment tests, it’s important that the
test should be directly related to the jobs. This will make the selection process more efficient and often satisfy legal
requirement. (4) Background investigations. Current business company is becoming more careful about
investigating a candidate’s work record, school record, and recommendations. It is simply too costly to hire, train,
motivate, and lose people and then have to start the process over. Background check will weed out candidates least
likely to succeed and identify those most likely to succeed. It is not always easy to obtain this information. (5)
Physical exams. A complete medical background and checkup can help to screen candidates. There are obvious
benefits in hiring physically and mentally healthy people. However, medical tests cannot be given just to screen out
specific applicants. If such tests are given, they must be given to everyone applying for the same position. (6) Trail
periods. Often company will hire an employee conditionally. This enables the person to prove his or her worth on
the job. After a period of perhaps six months or a year, the company has the right to discharge that employee based
on evaluations from supervisors. Such systems make it easier to fire inefficient or problem employees, but do not
eliminate the high cost of turnover.
The selection process is often long and difficult, but worth the effort because of the high costs of replacing workers.
The process helps assure that the people the company hire are competent in all relevant areas, including
communications skills, education, technical skills, experience, social fit, and health (Lawler, 2002; Laabs, 1999).
Current business companies recruit and select people who have the potential to be productive employees. The
company realizes that potential involves effective training programs and proper managerial incentives. The
processes of recruiting and selecting employees are presented in Figure 2.
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The organizational leaders must work to make the customers’ vision a reality by developing solutions better than their
competitors. Because the marketplace demands constant improvements, the senior staff must recognize that this goal
cannot be achieved without investments on human resource training, which will enhance the quality and promote
productivity (Mello, 2010). Investment in people is also imperative because success is dependent upon the collective
efforts and talents of team comprising the people in the company throughout the organization, associated vendors, and
suppliers (Peterson & Plowman, 1989).
Training is an immediate corrective action that satisfies the lawsuit settlement and serves the company’s business
strategic plan in promoting employee’s wellness to secure investments in its people. As an organization, the
employee training program will create positive environment as a whole in being socially responsible. As operational
benefits, the training will increase productivity by effectively managing resources, illuminating unnecessary wastes
and conserving reusable (Thomas & Taylor, 2000).
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In exchange for their work, employees receive compensation, a combination of payments and some benefits.
Compensation can be categorized as follows: (1) Base pay, a basic compensation than an employee usually receives
such as wage or salary. (2) Wages, payments directedly calculated on the amount of time worked. (3) Salaries,
consistent payments made each period regardless of the number of hours worked. (4) Variable pay, compensation
linked directly to individual, team, organizational performance (Mathis & Jackson, 2008). Employee compensation
is one of the largest operating costs for current business companies. The long-term of a company, perhaps even its
survival may depend on how well the company can control employee costs and optimize employee efficiency.
Several objectives can be accomplished by a carefully managed compensation and benefit program. They include
the following items: (1) Attracting the kind of people needed by the organization with sufficient numbers, (2)
Providing employees with the incentive to work efficiently and productively, (3) Keeping valuable employees from
leaving and going to work with competitors or starting their own competitive firms, (4) Maintaining a competitive
position in the marketplace by keeping costs low through high productivity, (5) Protecting employees from
unexpected problems such as a layoffs, sickness, and disability, and (6) Assuring employees of funds to carry them
through retirement (Schuler, 1999; William et al., 2001).
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credibility and more satisfaction to customers who receive products and services from the organization. (2) Quantity
of work. A number of products meet with the organizational expectation. Organization can produce a quantity of
products and goods sufficient for serving customers at appropriate level. (3) Effective time management. An
organization can spend appropriate time in producing products and providing service to customers with speediness
and promptness to increase customer satisfaction. New technologies can be applied to facilitate business operation.
(4) Cost of operation. An organization should consider the cost in operating and doing business and spend the
existing resources such as money, man, material, and technology for the greatest benefits of the organization. Chang
and Huang (2005) and Channuwong (2014) found that cost saving is one of the management techniques to increase
profits. In order to gain high profits, each business company tries to save operating cost as much as possible. Several
studies reveal that human resource management can increase organizational performance such as production, profit,
market share, and management efficiency. Michael et al. (1999) and Schuler (1999) found that effective human
resource management consisting of human resource planning, training and development, benefits and compensation,
retention of skillful and knowledgeable employees as well as performance appraisal can increase organizational
performance such as financial performance, marketing performance, operational performance, productivity and
customer satisfaction. Several studies revealed a linkage between human resource management, employee
satisfaction and organizational performance. Elorza et al. (2011) and Park et al. (2003) found that human resource
management can increase morale, motivation and work satisfaction of employees, which leads to organizational
commitment. When employees are satisfied with and committed to their organization, they will dedicate their time
and effort to work for the organization.
Based on the documentary study, it can be concluded that effective human resource management is the strategy to
increase organizational performance, which leads to reach organizational growth, organizational goals,
organizational success and organizational sustainability. A linkage between human resource management and
organizational performance was presented (Figure 3).
-Organizational Growth
-Organizational Goals
-Organizational Success
-Organizational Sustainability
Figure 3:- A Linkage between Human Resource Management and Organizational Performance.
Conclusion:-
Human resource management is the process of acquiring, training, developing, motivating, and appraising qualified
employees to perform the activities necessary to accomplish organizational objectives; and developing specific
activities and an overall organizational climate to generate maximum worker satisfaction and employee efficiency.
Employees are the most important components and valuable assets that organizations should take care and pay much
attention on their wellbeing, benefits and compensation so that they are committed to the organization and work to
increase organizational performance. Such attitudes have fueled the rising emphasis on hiring the right people to
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help a company reach its goals and then overseeing the training and development, motivation, evaluation, and
compensation. In order to increase organizational performance, human resource managers of the current company
must figure out and consider how to attract qualified employees from a shrinking pool of entry-level candidates,
how to train less educated, poorly skilled employees, how to keep experienced employees when they have fewer
opportunities for advancement, and how to train employees to become good managers in the future.
The reason that human resource management is receiving increased attention now is because of the major shift from
traditional manufacturing industries to service industries and high-tech manufacturing organizations that require
more technical job skills and problem-solving skills. As in all areas of business, the world of human resources is
changing very quickly. HR managers need to be well informed about the trends in recruiting, compensation,
benefits, training and development, and employee satisfaction. In the past, this required a lot of reading and
networking with colleagues. However, today networking of a different kind makes it easy to find information on hot
HR issues. Several studies revealed that human resources can increase organizational performance and drive the
organization to achieve its goals. Among the four management resources comprising of man, money materials, and
management, man is the most important because man can carry out other resources. Therefore, it can be concluded
that human resource management is the most important management strategy to elicit human skill and talent to work
for the organization and put the right man on the right job for increasing organizational performance.
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